Texas legislature finds deal on cutting school funds elusive

Deal on cutting school funds elusiveLegislators seek compromise to buy time until the 2013 session

By Gary Scharrer |
May 24, 2011

AUSTIN — Legislative leaders continued to look for a compromise school funding plan Tuesday to allocate $4 billion worth of public school cuts they say is necessary to avoid a special session this summer.

A bill to make those cuts collapsed late Monday night because of a procedural flaw that now has lawmakers scrambling between House and Senate chambers — with a stop Tuesday afternoon to meet with Gov. Rick Perry's staff — in search of a solution to buy them time until the 2013 session.

House leaders prefer a proration, an across-the-board cut for the state's 1,040 school districts amounting to nearly 6 percent for the 2012-13 school year. Senate leaders want school districts that have benefited from the controversial "target revenue system" to take larger cuts. Their plan could cut some districts 9 percent.

Lawmakers created the target revenue system five years ago that largely froze school funding at levels districts were getting in 2006 — except for enrollment growth. The temporary plan has continued and expanded to the point where most school districts are no longer funded under traditional formulas.

The current legislative session ends on Monday. But legislative deadlines obligate lawmakers to settle on a school funding plan before Friday, House Education Chairman Rob Eissler, R-The Woodlands, said.

"In any plan where you have the same amount of money, it's how you rearrange the furniture," Eissler said.

No cash for growth

School funding cuts are necessary because of the state's massive revenue shortfall, and state leaders have limited the amount of money that can be used from the rainy day fund to plug budget holes. This stands to become the first time in modern history that Texas will not pay for school enrollment growth — about 170,000 additional students over the next two years.

Also pending are efforts to give school districts flexibility to absorb budget cuts by allowing larger class sizes, cutting teacher pay and giving teachers and other school employees unpaid leave.

Lawmakers have been hammering out a compromise budget for the next two years that would carve billions of dollars from current state and federal spending.

Along with the spending plan, they've still got to pass a revenue measure to help balance it, and it appeared any compromise on the school finance plan would have to be grafted onto that must-pass legislation.

Medicaid expenses

Budget negotiators already have decided not to pay for $4.8 billion in anticipated Medicaid expenses in their two-year budget plan, meaning lawmakers in 2013 will have to cover that cost.

If lawmakers don't change the current school funding formulas, the state will still owe school districts an additional $4 billion — the amount that the proposed budget falls short of funding those existing formulas — Senate Finance Committee Chairman Steve Ogden, R-Bryan said.

"If we don't change the state law and basically scale back on that entitlement, then you'll have that hole that we have to fill in addition to the probable Medicaid hole, and we will really be in serious trouble in this state," he said. "We can't kick the can down the road on both Medicaid and school finance at the same time."

Lawmakers said they would try to add the essential part of the school finance plan to the must-pass revenue legislation, Senate Bill 1811. Shapiro called it "the last train in town."

Eissler speculated that lawmakers would try to develop a hybrid plan, using concepts from both House and Senate versions. Legislators then would study the impact on the school districts they represent.